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Energy Bill Will Test Pelosi's Command

by

Zachary Coile

WASHINGTON - Democrats, in taking back the House from Republicans, promised to tilt the nation's energy policy away from oil drilling and toward efficiency and cleaner sources of energy. This week their pledge will be put to the test.

As the House starts debate on its energy bill, Speaker Nancy Pelosi must decide: Will she push a measure, opposed by electric utilities, to require them to produce 20 percent of their power from renewable sources? Will she allow a vote on a major increase in fuel economy that's being fought by autoworkers' unions and a few powerful Democrats?

"When you talk about energy policy, there is the car piece and the electricity piece," said Marchant Wentworth, legislative representative for the Union of Concerned Scientists, who has been lobbying the Democratic leadership. "You need both for an energy-efficient policy."

The Democratic speaker from San Francisco has told environmentalists she supports raising fuel economy standards to at least 35 miles per gallon and requiring utilities to generate 20 percent of their power from renewable sources such as wind, solar or biomass by 2020.

But neither measure is part of the energy bill now, and Pelosi has not committed to bringing the proposals to the floor as amendments -- although she's leaning toward putting the electricity standard to a vote.

Pelosi is balancing her desire for a new, greener energy policy with her fear that if the bill tries to go too far, it could lose support among Democrats from energy- and auto-producing states -- who are being lobbied vigorously by industry to kill parts of the bill.

It's the same calculus that led Pelosi to support a farm bill that made modest changes to federal crop subsidies, even though she had backed deeper reforms. With a narrow majority and a desire to protect vulnerable Democrats in farm states, Pelosi chose a smaller victory and unity in her caucus over gambling on achieving a more sweeping policy change.

Pelosi's allies say she's working behind the scenes to line up support for both proposals as amendments to the energy bill.

"The speaker is working every way possible -- and so are we -- to make this happen," said Rep. Mark Udall, D-Colo.

Pelosi's office said the details of the energy package are still being worked out. The bill -- which is competing for time in the busy final week of the congressional session before the monthlong August recess -- could hit the floor as soon as Tuesday.

Pelosi's aides said the speaker wants a vote on increasing fuel economy standards, but she won't say whether it will be this week or this fall. "That hasn't been decided yet," said Pelosi spokesman Drew Hammill.

Environmentalists say Pelosi is being coy about the timing for a reason: The Senate already has passed an increase in Corporate Average Fuel Economy (CAFE) standards, and House Democrats may skip a vote now and add the provision during a House-Senate conference committee this fall to reconcile the two versions of the bill. That strategy could prevent a head-on collision with Rep. John Dingell, D-Mich., the chairman of the House Energy and Commerce Committee and the most powerful foe of an increase in fuel standards -- although critics deride it as a backdoor strategy.

Rep. Todd Platts, R-Pa., a co-author of the House fuel economy bill, said he backs Pelosi's decision no matter which route she takes. "The commitment is about getting a bill to the president's desk," he said.

The auto industry is working hard to defeat a big fuel economy increase. In an unprecedented move -- and a sign they feared they are losing the debate -- automakers backed a rival bill by Rep. Lee Terry, R-Neb., and Rep. Baron Hill, D-Ind., that would raise fuel economy overall to at least 32 mpg by 2022, but still allow light trucks to be less fuel efficient than cars. (Currently, automakers must meet a standard of 27.5 mpg for cars and 22.2 mpg for pickups and sport utility vehicles.)

"This is a balanced approach, this is a compromise," said Dave McCurdy, president and CEO of the Alliance of Automobile Manufacturers.

The proposal has been picking up backers quickly, including dozens of Republicans and moderate Democrats who have never voted for any fuel economy increase in the past. It shows how much the dynamics of the issue have changed, with gas prices soaring above $3-a-gallon this spring and public concern growing over global warming and U.S. reliance on oil from the Middle East.

"The whole frame of the debate has shifted," said Kevin Curtis, senior advocate for the Pew Campaign for Fuel Efficiency, who is pushing House Democrats to seize the momentum and pass a major fuel economy hike. "Even the opponents of CAFE know they can't oppose CAFE, so they're supporting the weakest possible form of CAFE."

While the headlines in the debate focus on fuel economy, the energy bill is full of less-noticed provisions that could have major effects.

The bill would revoke $16 billion in tax breaks for oil and gas production and shift that money into new subsidies for wind, solar and geothermal power. The Senate narrowly failed to pass a similar tax provision. It probably will be one of the thornier issues the House and Senate will tackle to forge a single bill.

The measure also includes a $3.5 billion package to boost cellulosic ethanol, and offers grants and tax breaks to help homeowners and local governments cut their energy use. The bill would raise energy efficiency standards for lightbulbs and appliances and requires the federal government's entire operation to be carbon-neutral by 2050.

The oil and gas industry is lobbying feverishly to spike several pieces of the bill, including provisions to change the way their overseas operations are taxed and to block them from benefiting from a rollback in the corporate tax rate. They've been ginning up opposition among oil-state Democrats to increased fees for drilling permits and the proposed elimination of a program that allows firms to pay the government royalties in oil or gas, not cash.

Pelosi is keeping a close watch on wavering Democrats. With a thin House majority -- and strong GOP opposition to the bill -- she needs the votes of the roughly two dozen Democrats from oil- and gas-producing states.

Electric utilities that rely on coal are battling the 20 percent renewable electricity standard. The Edison Electric Institute, the industry's leading trade group, warns lawmakers the proposal could penalize utilities in regions such as the Southeast that have less wind power. Environmentalists counter the claim, noting that every region of the country has some form of renewable energy -- whether it's solar, wind, biomass, geothermal or hydropower.

"Utilities have had the ability to turn to renewables since 1978 and they haven't," Wentworth said. "This is the first time we would put in place a federal requirement for utilities to take action."

Twenty four states already have similar renewable electricity standards. California, which has among the most stringent standards, must produce 20 percent of its power from renewable sources by 2010.

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